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President Obama and WellPoint Spar Over Coverage for Breast-Cancer Patients

Source: WSJ

Posted on 12 May 2010

The war of words between the Obama administration and WellPoint Inc. escalated over this last weekend, as WellPoint's chief executive rebuked the president for what she said was false information he gave the public about the insurer's coverage of breast-cancer patients.

In his weekly radio address broadcast Saturday, Mr. Obama said his administration recently asked an insurer to stop systematically dropping coverage of women diagnosed with breast cancer.
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The president didn't specifically name the insurer that dropped the coverage, but WellPoint has lately been fending off accusations that it targets such women, and Chief Executive Angela Braly clearly believed the remark was directed at WellPoint.

Company spokeswoman Kristin Binns noted that WellPoint is the only insurer that the administration and news media have pointed to on the subject.

Ms. Braly late Sunday fired off a letter to the president in which she said Mr. Obama's statement "grossly misrepresents" the facts. "To be absolutely clear: Despite your claims, WellPoint does not single out women with breast cancer for rescission. Period," she wrote.

Ms. Braly used the opportunity to criticize the administration for "attacks" on health insurers, which she said "must end."

She said she has gotten no response to her requests to meet with Health and Human Services Secretary Kathleen Sebelius.

The country's largest insurer has been under fire from Democrats over its business practices, but the reference by Mr. Obama takes the spat to a new level. The breast-cancer allegations, which were raised in a Reuters article, have caused anxiety for policyholders and spurred questions from regulators, according to Ms. Binns.

"I think we were disappointed to hear them repeat it" in the Obama address, she said.

Ms. Sebelius said her goal is to shift the power from companies to consumers in the individual health-insurance market, where WellPoint is by far the biggest player. with nearly twice the number of policyholders as its nearest competitor, according to Oppenheimer & Co. "We have an opportunity to call out practices that are not treating beneficiaries appropriately," said Ms. Sebelius in an interview Monday. "It's not the company; it's the practices."

Meanwhile, the White House pledged to keep insurers' feet to the fire. An administration spokesman said the spotlight has in some ways moved companies to change practices sooner than is required by the new law.

For instance, after the administration drew attention to the reports of breast-cancer patients' coverage being rescinded, insurers including WellPoint pledged to end rescission before the new law requires them to do so.

"When we hear disturbing reports that an insurance company is systematically targeting women with breast cancer, we won't hesitate to speak out," the spokesman said.

This latest thrust and parry comes after a bruising few weeks for WellPoint. The Indianapolis insurer was forced to withdraw a request in California to raise rates by up to 39% after an outside actuary hired by the California insurance department found mathematical errors in its filing.

Last week, Ms. Sebelius urged insurance commissioners in other states to investigate whether similar errors occurred.

Whether or not the company can raise rates is key to its performance on Wall Street. With a California rate change delayed, the company says it is losing money in the individual market there.

Regulators in Georgia, Kentucky and Ohio, where WellPoint runs Blue Cross Blue Shield plans, say they are investigating the company's filings. Any further delay in WellPoint's ability to get the rate increases it says it needs to cover medical costs could be problematic.

Ms. Binns said WellPoint would work with local regulators. "We are heavily regulated at the state level today," she said. "We feel as though we are compliant in all of our Blue states."

John Oxendine, the Georgia insurance commissioner and a Republican gubernatorial candidate, said his office is examining WellPoint's filings to see if the mistakes are more systemic. "We're considering whether they could be honest mistakes or something more severe," said Mr. Oxendine.

He added that the administration's attacks appear political in nature. "HHS all of a sudden realized they've got a huge bill they don't know how to implement and they don't know what to do about health-care costs so [Ms. Sebelius] is saying 'investigate WellPoint' to divert people's focus," said Mr. Oxendine.

Ms. Sebelius said her motive isn't to deflect attention from rising costs, and says she intends to work with insurers and providers to address the issue.
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WellPoint and Ms. Sebelius have a history going back to 2002 when Ms. Sebelius was Kansas insurance commissioner and a WellPoint predecessor company tried to buy Blue Cross and Blue Shield of Kansas. Ms. Sebelius blocked the sale, saying premiums would rise too sharply for Kansans.

Anthem, which merged with WellPoint in 2004, grew rapidly by acquiring Blue plans in various states, and Ms. Sebelius's rejection indicated that the strategy would be encountering increasing resistance.

Ms. Sebelius's decision then was based on her opinion that Anthem prioritized profits over patient care, said Sandy Praeger, who succeeded Ms. Sebelius as Kansas insurance commissioner in 2003.

"It was all based on the company's reputation," said Ms. Praeger, talking of Ms Sebelius's rapid rise. "She rode that decision all the way to the governor's office."

Ms. Sebelius said she based her decision on data indicating that the local Kansas company kept overhead costs lean, and she believed a larger entity would have higher costs that would be passed on to consumers.

Ms. Sebelius said she hasn't been in touch with Ms. Braly other than at a meeting several months ago when some insurers were called to Washington to defend rate increases.

She said the job of reaching out to WellPoint belongs to Jay Angoff, the former Missouri insurance commissioner who runs the new Office of Consumer Information and Insurance Oversight created after the federal health legislation passed.

Ms. Sebelius said she has no way of knowing if WellPoint is an outlier.

She said Mr. Angoff has been in touch with WellPoint several times on provisions such as early implementation of new coverage for dependents under age 26.